Organic wines are increasingly produced and appreciated. Because organic production is more costly, a crucial question is whether they benefit from a price premium. We estimate hedonic price functions for Piedmont organic and conventional wines. We use data on the production side in addition to variables of interest to consumers. Our results show that, along with characteristics of interest to consumers, some farm and producer characteristics not directly relevant for consumers do significantly affect wine prices. We find that organic wine tends to obtain higher prices than conventional wine. The price premium is not simply an addition to other price components; organic quality modifies the impact of the other variables on price. (JEL Classification: C21, D49, L11, Q12)

In this research an alternative is proposed for viticulture producers that would allow them to maintain their income and prevent the abandonment of their agricultural activity. The proposed alternative is the production of organic wine with subsequent commercialization in the local market. The suitability of the alternative is measured by the acceptance of the product in local markets. This acceptance was determined through contingent valuation, which relates probability of purchase to willingness to pay (WTP). Since regional differences could exist for product acceptance, the preliminary hypothesis was formulated that the importance of the viticulture sector in the regional economy makes consumers value farm work more highly and pay more for sustainable agricultural practices. Two regions of Spain were taken into consideration because of the different weight of their agricultural activity: Castile-La Mancha and the Community of Valencia. A survey of 800 wine consumers was made (400 from each region) to determine WTP. From the results it was shown on the one hand that organizing organic wine in local markets can be a profitable alternative for wine producers and, on the other hand, consumers from regions where wine production shares a larger proportion of the regional economy are willing to pay more for organic wine.